Noble Group taps Bermuda court to keep debt restructuring plan afloat

Noble Group founder and Chairman Richard Elman poses at his office in Hong Kong January 22, 2016. — Reuters pic
Noble Group founder and Chairman Richard Elman poses at his office in Hong Kong January 22, 2016. — Reuters pic

SINGAPORE, Dec 11 — Noble Group said today it will push on with its US$3.5 billion debt restructuring by keeping the new company private, a last-minute effort to avoid seeking insolvency protection for its businesses.

After consulting its creditors and advisors, the company will ask a Bermuda court on Dec. 14 to appoint an officer to Noble to enact its restructuring, it said in a statement to the Singapore Exchange (SGX).

This follows a move by Singapore authorities last week barring Noble from re-listing the restructured company, dubbed New Noble, on the SGX because of allegations of improper accounting. The re-listing is a key part of its controversial debt-for-equity restructuring plan that has been in the works for nearly two years.

Noble, once Asia’s biggest commodity trader, has warned that if the restructuring fails, it would begin insolvency proceedings, likely in Britain.

In today’s statement, Noble said the court officer will be appointed to the company only and not to any of its subsidiaries, which will continue to trade normally.

“The day-to-day operations of the group will therefore be unaffected: the group’s trade finance facilities will continue to be available to it and payments to customers and suppliers will be made as usual,” Noble said.

“Existing shareholders of the company would still receive the New Noble shares to be allocated to them and therefore will continue to participate in any potential recovery upside,” it said.

Under the restructuring, Noble’s debt would be halved. In return, the firm’s creditors, made up mostly of hedge funds, would own 70 per cent of the restructured business, while existing shareholders’ equity would be reduced to 20 per cent and Noble’s management would get 10 per cent.

“The restructuring terms are the same, except that the company’s existing shareholders will own 20 per cent of a privately held firm instead of a listed one,” one source familiar with the deal told Reuters.

Noble’s market value has been all but wiped out from US$6 billion over the past four years after its accounting was questioned by Iceberg Research in February 2015. Noble has sold billions of dollars of assets, taken hefty writedowns and cut hundreds of jobs, while defending its accounting.

Noble said that subject to the court order on Dec. 14, the restructuring will come into effect on Dec. 18.

The restructured company would transform itself into an Asia-focused coal-trading business. — Reuters

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